It’s time to put an end to financial abuse

Financial abuse is one of the most manipulative forms of domestic abuse and is often a warning sign for physical and sexual violence. To coincide with the UN International Day for the Elimination of Violence against Women we shine a light on a problem that has remained in the shadows for too long.

Financial abuse, also known as economic abuse, occurs when another person controls access to your money or property without your consent. It can be perpetrated by your partner, your child, someone else in your family or even a friend. Under the Family Law Act financial abuse is listed as an example of family violence in the following terms:

“Unreasonably withholding financial support needed to meet the reasonable living expenses of the family member, or his or her child, at a time when the family member is entirely or predominantly dependent on the person for financial support.”

Older people are particularly susceptible to financial abuse because they become increasingly dependent on family members later in life. This is often referred to as ‘elder abuse’ and may be part of the Royal Commission into Aged Care which has been tasked with examining “all forms of abuse” in its terms of reference.

But there is less of a focus on financial abuse within intimate partner relationships. We spoke to Shivani Gopal from women’s advocacy group The Remarkable Woman about the problem. Shivani had an adult arranged marriage at the age of 20 that was decided by her family when she was 18. While she loved her husband who she met as a teenager, she resented the cultural pressures that dictated when she had to marry him. Five years later she was very unhappy and desperate for a divorce despite a strong Indian cultural taboo. Yet in the face of immense cultural pressure she managed to leave the marriage and she credits one factor: her financial independence gained from working as a financial planner.

“Money affords you the ability to make the right choices in life. If you’re stripped of your financial independence what you’re stripped of is choice, opportunity and freedom,” says Shivani. She’s quick to point out that she is not telling women to distrust their partner. Plenty of perfectly capable women are happy to delegate financial decisions to their partner and that works out just fine, she says. Shivani’s message is a simple one: self-educate before you delegate. “I want that to be the mantra for every woman financially. If you’re going to delegate, whether it be to your partner, accountant, or financial planner, I want you to self-educate. Read the paperwork and do some research,” she says.

Since her divorce, Shivani has left financial planning and set up a new business, The Remarkable Woman, which aims to empower women and help them take control of their finances. However, her time in financial services identified some institutional roadblocks.

“I would see men and women who would come into my office and intellectually they were absolutely equal. Both the man and the woman were doing phenomenal jobs, doing some great things with their lives, and earning a really strong income,” says Shivani. “But I did see a general majority of women deferring to their husbands to make those major financial decisions,” she says. More disturbingly, she found the finance sector assumes the man in the relationship will be the ultimate decision-maker. Even when Shivani’s primary client was a woman, her company’s official correspondence always listed the husband first. “I feel like the industry as a whole has a long way to go. But by and large, women were deferring to their partners. And I think the reason for that is that we’ve been brought up and socialised and cultured to do so,” she says.

The warning signs of financial abuse

The extent of financial abuse is difficult to gauge, but a recent RMIT University study found 16% of women and 7% of men experienced it in a previous relationship. According to Shivani, it always starts slowly. “You’ll find that small liberties are taken away from you under the guise of love or trust or trying to make your life easier,” says Shivani. One example is having your partner insist early on that you have a joint bank account and then exclusively managing the account themselves, she says. “You may also find that your partner wants a joint credit card or insists on you applying for credit cards because it might be ‘easier’,” she says. “Bills might be in your name and you might not get the information as to why that is the case. You may find your partner has a gambling problem or debts against their name.”

Financial abuse can start in subtle ways and then turn into a downward spiral where the abusive partner takes complete control of the finances, says Shivani. “They may start taking your money and then giving you back a ‘spending allowance’ which could be done under the guise of ‘budgeting’,” she says. “But whenever that happens I say to women that is a serious red flag going up, and you should really remove yourself from that situation and think clearly about what is happening to you.”

Breaking the cycle

Recognising there is a problem is the first step to removing yourself from a financially abusive relationship. For instance, if a woman enters a relationship early in her life it can be hard to know what constitutes a ‘normal’ financial set-up. Shivani says that is when it is vital for women to support other women. “If you’ve got a friend who is constantly spending money in cash or throwing away receipts just ask them why,” she says.

The response could be a light-hearted ‘I don’t want my partner to know what I’m spending money on’, but it could mask something more sinister. For women who have recognised they are being financially abused and are looking for help, a good place to start is the national hotline and website 1800RESPECT (you can find details at the bottom of this page). Another good place to turn is a trusted friend, says Shivani. “I know that money is really hard to talk about, especially in Australia. We don’t like to talk about our finances the way Americans do,” she says. “If you’ve got a friend that you trust, talk to them. Another really good place to start is your bank.”

NAB, one of the two major banks that Australian Ethical invests in, has paid $1.4 million in Family Violence Assistance Grants in partnership with Uniting CareRing. The grants have funded a counselling service providing ongoing support and safety planning; a new, independent transaction account to help establish financial independence; and, in some circumstances, a financial grant towards services to assist people looking to leave abusive relationships. NAB’s website has information about protecting your finances when you’re in a relationship. Australian Ethical has committed to implement a Financial Inclusion Action Plan that recognises the financial services sector has struggled to meet the needs of excluded, disadvantaged or vulnerable people – including women and people in financial difficulty. Australian Ethical also has an internal domestic violence policy which outlines how we support staff experiencing domestic and family violence.

Speaking about her own experience leaving an arranged marriage, Shivani says financial security was a “life raft” that helped her get her life back on track. “I didn’t realise how important my financial independence was until I was telling my friend about all of my woes and how I felt as though I couldn’t leave my situation because of my cultural background,” she says. “My friend asked me what I was going to do financially because she was so used to having no financial options. But that was the one thing that I had on my side, and that’s what galvanised me to move forward,” says Shivani. “I couldn’t say more strongly to women – be proud of your finances, and don’t give away control without really knowing what you’re doing,” she urges. “Self-educate before you delegate!”

If you are experiencing financial abuse or know someone who is in an abusive relationship, call 1800RESPECT, the National Sexual Assault, Domestic Family Violence Counselling Service on 1800 737 732. For more information about the service, visit the 1800RESPECT website.

This information is general information only and does not take account of your individual investment objectives, financial situation or needs.
Before acting on it, consider seeking independent financial advice.